The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1887-05-06
AS SECURITY FOR MORTGAGES

in the Kansas Pacific, of which witness
related the story yesterday. Anderson
asked if the witness knew who erased
the answer to this question, What
were the net earnings of the Kansas
Pacific last Year," The original an
swer was: Not much, if anything"
and oyer which erasure was written,
About half million dollars" Mr..
Holmes knew nothing about this,
but the substituted answer was
probably the correct one. Mr..
Holmes thought Judge Dillon drew
up the articles OF consolidation
of the Kansas Pacific and Union
Pacific, and that 1t was prior to
January 81, 1880, or prior to the time
stock passed from the ownership OF the
Kansas Pacific to the hands of the
Union Pacific party-Messrs. Jay
Gould, Russell Sage and others.
THE RECORD STATES
that Mr.. Gould held and voted on 10
Oh shares; Mr.. Ames. 4,O35; Sydney
Dillon, GLIB; Henry Willard, not any;
nor Mr.. Holmes; Russell Sage had 9,977
shares, and these constitute the Union
Pacific party. The shares were $50
each, and $780, 44 shares were repre-
sented in the agreement. These men
were all directors of the Union Pacific.
Mr.. Holmes didn't know how much
profit there was in the pool, but he
thought. not so much as $4,000, 900.
Commissioner Pattison asked who get
D session of the $10,000,0O0 of Kansas
Pacific and 81 100000 of Denver Pacific
stock, but Mr.. Holmes said he thought
they simply drifted back to their orig
inal owners. Under the consolidation,
Gould or any other holder of Kansas
Pacific stock exchanged two of their $50
shares for one 500 share of the Union
Pacific stock, their values being about
the same in the market at that time.
The relative status of securities was
fixed by arbitration of all leading par
ties, at trihe greater than their mar
ket quotation, as an inducement to
holders to put them into the pool as
good investment. The schedule at
which the
VARIOUS SECURITIES WERE ADMITTED
to the pool was as follows: Stock, 12H
per cent; floating debt, so per cent. !;
unsubordinated income bonds, 80 per
cent; subOrdiDated income bonds, 80
per cent. and second land grant bonds,
80 per cent"
lis it not true" asked Anderson.
Sage, Frederick Ames and others you
have named obtained credit by means
OF the paying of large amounts CT Kan
sas Pacific stocks in subordinated
bonds, unsubordinated bonds, second
land grant bonds, Leavenworth Pacific
stock, etc?"
Holmes said yes, in exchange for
each other. Holmes said the Union
Pacific profted by the consolidation,
in that it got the benefit of handling,
and thereby stopped the competition of
the Kansas Pacific, and Gould thus
controlled the dangerous weapon OF a
hostile rival. If the consolidation had
not been made. the Kansas Pacific would
not have been worth ten cents on the
dollar, and Denver Pacific stock would
not have been worth more than
ITS VALUE AS WASTE PAPER.
To General Pattison, Holmes said he
didn't think the effect was to load
Union Pacific with two valueless roads,
because the Kansas Pacific had been
good paying road ever since. 1t was
true the Denver stock was worth $780,
900 the next day before the consumma :
ton of the consolidation.
After recess, Judge ]. l. Dillon,
nephew of sydney Dillon, who. became
an attorney for the Union Pacific in
1879, was the witness. He thought he
prepared the articles of consolidation
of the roads under instructions. Beyond
this fact nothing Of interest was elected
in his testimony.